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What Japanese market participants understand that Western rating agencies do not is that fiscal deficits generated during a balance sheet recession are the result of economic weakness triggered by private-sector deleveraging, and that the private savings needed to finance those deficits are by definition made available at the same time.

In other words, such conditions lead to a substantial surplus of savings in the private sector. What makes an economy under such conditions fundamentally different from an ordinary economy (i.e., one that is not in a balance sheet recession) is that those savings are plentiful enough to finance the government’s deficits.

he continues to miss the causation- govt spending adds balances, taxes removes them.
the remaining balances are then shifted to securities accounts to the extent the govt. net offers the securities for sale

Leisman created the prison that he lives in over there at CNBC. It’s his own fault. He came over from the Wall Street Journal and was always very measured and conservative in his comments. Now he’s stuck in that role. He’s become everybody’s whipping boy and he can’t even fight back forcefully.

I was a regular on CNBC back in the 1990s. I was one of the first original guest hosts on Squawk Box when it started back in ’95. Rick Santelli started doing stuff from the CME back around the same time. Rick was not the ranting, raving, lunatic that he is now. He created that role and it was popular so the bosses at CNBC let him run with it because it got ratings.

For all its faults I have to give Fox credit in that I am never told what to say or threatened with being axed because I have a different view. CNBC is loaded with a bunch of egotistical, insecure and self-important commentators. Liesman’s a nice guy in a meat grinder.

They’ll end up folding the various “sovereign” debt into a pan-European bond. The precursor being the EFSF/ESM bond purchase program. They’ll institute a europe wide tax, flog it off as some green initiative that the patricians will sell to the plebs.

BFG, your scenario seems likely. To me, the least attractive bonds in Europe are the German Bunds. They still trade as if Germany were sovereign.

jcmccutcheon Reply:April 19th, 2011 at 4:17 pm

Yes Mario. Its good that he mentioned that Warren made money using MMT principles in trade strategy. Perhaps Warren gets more air time. But he needs fair time. CNBC should do a one hour MMT expose. What better time than now? Warren’s interview with that Connecticut newspaper during his senate was awesome. The reporters seemed astonished by the whole thing. Because they threw every conceivable curve-ball question at him and he answered everything gracefully. Thinking back I recall them asking him why the soviet union collapsed with their “Central Planning” ( as if MMT was Central Planning”). I loved the answer.

god – that was painful to listen too. it’s coming out of left field for most people. we need to put the dots close together so people can grasp the concepts. refining the story, or pitch, or whatever you want to call it takes time but we’re definitely getting better. seems like alot of folks on this blog have been talking about how to frame MMT lately – which is a good thing because it’s definitely evolving and improving.